Individuals that have a 500 credit score or at least a number close to 500 often ask what that means for their opportunities or lack of opportunities regarding actions that are credit score dependent. To help answer the question we need to know the credit scores range. FICO credit scores have a range that can be between 300 and 850. 850 is the highest credit score and 350 is the lowest. When evaluating a credit score number, FICO score are used because they are the most widely used credit score model for lending and credit.
A 500 credit score, based on the credit scores range with FICO, is near the bottom of the heap. An individual with a 500 credit score is simply going to have a bad credit profile and bad credit history leading to a bad time getting credit and access to services that dependent on credit and a credit score such as cell phones and rental apartments.
500 credit scores are considered very risky credit by the lending community. If you have a 500 credit score, your financial life is probably somewhat difficult. Most banks, credit card companies and mortgage lenders will not approve applicants that have a 500 credit score.
There are still options for individuals that have a low credit score or a 500 credit score. Lenders and creditor will most certainly demand good collateral or greater equity and higher interest rates. You can also always get a secured credit card and some auto lenders specialize in subprime credit.
The problem with the 500 credit score is not just the credit score but the score is developed by the information in your credit report. There can a number of underlying problems in your credit report that can drive a 500 credit score. Common problems that lead to low credit scores include excessive late payments, collection accounts, charged off credit cards, public records such as judgments and bankruptcies. Other factors can drive down credit scores such as excessive inquiries and high debt amounts relative to available credit, but when your score drops to the 500 range the most common causes are public records, collection accounts and charged off delinquent accounts.
Before you get to close to the ledge and are prepared to jump, your FICO credit score can be improved. In fact, it may be easier to increase the credit score starting at 500 than it is if you credit score is 700. One of the first things you need to do if you find yourself with a 500 credit score is to educate yourself on the process of credit repair.
This means that you will have to get a copy of your credit report and learn about the factors that have caused your bad credit history and bad credit score. When determining how to improve a 500 credit score, it is important to address what you are doing to affect your credit history in the past as well as right now. Of course, you should start immediately on keeping any existing credit card balances low, establishing a good payment history on those existing accounts or with new accounts such as with a secured credit card and keep your older accounts open.
Good credit repair will also involve clearing up as many delinquent accounts and delinquent payment records in your credit report as possible. This task can be done relatively quickly and efficiently by disputing your credit report with a targeted and organized approach.
A 500 credit score can put you in a tough credit position, but this number can be improved with a little bit of work on the right pieces of your credit history.
See also:
Credit Scores Range
Highest Credit Score
Average Credit Score
What is a Good Credit Score
How to Dispute a Credit Report
Credit Dispute Online
Get a Free Credit Report
Credit Report Dispute Letter